Offshoring i.e. Overseas outsourcing – is it a good idea?


Lately, outsourcing to offshore vendors has become a popular trend in IT departments. Cheap labor often is cited as the reason. You may reduce the outlay for employee benefits, but you must ask yourself if there is truly a benefit to your company in the long run?

Some great engineering schools in far flung countries are turning out graduates with technical skills to rival the best. Offshore vendors are prolific in Brazil, China, Russia, Ukraine, India, the Philippines, Pakistan and Vietnam. However, dealing with vendors from another country isn?t a piece of cake. You need to find one that understands and applies good business principles and development methodology, rather than just supplying expert technical skills.

Raza Imam of Adaptive Solutions, writes: "Software projects don’t fail at the ?ones and zeros? level; they fail when there is a lack of communication, trust and commitment."

He points out several potential pitfalls to consider when deciding to take your business overseas. Work ethics, culture, language, time zones, and contact law all may be different from life as you know it in your own office cubicle.

In daily life, we have all experienced the jolt of discovering that your assumptions were not the same as those of your spouse, co-worker or boss. If you do not clarify your expectations prior to signing up for the long haul, your project has a good chance of failing.

Imam emphasizes that you need a team who can get the job done, not one who drops the ball. Projects will always suffer from delays, buggy code, or employees who leave at a critical time. It is how those bumps in the road are handled by the vendor that dictates if you?ll successfully reach your destination.

Biting off more, or less, than you can chew can become an issue. Could your vendor be acquired, making your account a small fish in a big pond, so that it languishes from lack of attention? On the other hand, what if your company grows, but your vendor isn?t capable of keeping up, and you have to find and adjust to a more suitable vendor?

The consultant recommends that you dedicate people at both sides of the project to keep the job on track. You?ll need someone who speaks the native language, but is also fluent in English. Misunderstandings due to language differences can slow, if not kill a project. Poor communications combined with changing requirements will surely be detrimental to your timely success.

Memos from Brazil, Vietnam, or Russia could be a nightmare: 

  • Hemos completado un mil cuarenta y dos líneas de código.
  • Chúng tôi hoàn thành m?t trong b?n m??i ngàn hai dòng mã.
  • ?? ????????? ???? ?????? ????? ??? ??????? ????.

So just how many lines of code did your vendor complete today? Uh, well?you see his point.

Imam warns that vendors who focus on finite technical tasks rather than on a long term relationship with your company may not perform in your best interest. A good offshore vendor will introduce new ideas, propose alternative solutions, and be alert for potential problems down the road.

Imam tells those considering outsourcing to be skeptical of the vendor who is a "no problem" kind of guy, or a "yes" man. It is wise to test potential vendors by having them meet incremental milestones. Thus, you can evaluate their competency, and recover from small errors before you are in too deep.

And finally, he says ? be realistic. Quoting a unnamed Silicon Valley executive: "Cost, quality, and speed – you can only have two." That bit of wisdom does not apply only to offshore projects.